Evolution of the X-Box Supply Chain
Evolution of the X-Box
10/14/2009
1.
The video game console market is extremely challenging. The competition is fierce between Microsoft’s
Xbox and Sony’s Playstation. Nintendo turns high profit margins with its console, the Nintendo Wii, however it competes virtually in its own market, pursuing the casual gamer. Microsoft and Sony lose money on sales of their consoles, and make up the profit on the games. Microsoft was not extremely successful with its development of the original Xbox, and made some essential changes in their gaming strategy to make the introduction of the Xbox 360 more profitable. The two important changes Microsoft made were repositioning the release date and changing the product offering.
One of the biggest problems with the original Xbox was its release date. This problem was fixed with their second generation console. With video game consoles the release date is highly correlated to market share. First of all, when the Xbox was released, the Playstation 2 already had a predecessor with market share. “In Q4 1999, when the PS2 was launched, Sony sold 1.1 million PS1 consoles, and 1.4 million PS2 consoles.” ("Evolution of the Xbox
Supply Chain.") This brand presence was further established when the Playstation 2 was released 12 months before the Xbox. Customers who wanted to move onto the next generation of gaming bought the PS2, choosing not to wait a full year for the Xbox. “Microsoft did not have the established base of games and gamers that Sony enjoyed, and
Sony continued to dominate the market ("Evolution of the Xbox Supply Chain.").”
One of the failure’s of the original Xbox has become a success for Microsoft with the Xbox360. Xbox did not have to worry about being a newcomer into the market anymore, the problem with their first console. Not only that but now they were doing exactly what Sony did. They chose to release their console over a year earlier than the
PS3 taking advantage of the early adopters. In
10/14/2009
1.
The video game console market is extremely challenging. The competition is fierce between Microsoft’s
Xbox and Sony’s Playstation. Nintendo turns high profit margins with its console, the Nintendo Wii, however it competes virtually in its own market, pursuing the casual gamer. Microsoft and Sony lose money on sales of their consoles, and make up the profit on the games. Microsoft was not extremely successful with its development of the original Xbox, and made some essential changes in their gaming strategy to make the introduction of the Xbox 360 more profitable. The two important changes Microsoft made were repositioning the release date and changing the product offering.
One of the biggest problems with the original Xbox was its release date. This problem was fixed with their second generation console. With video game consoles the release date is highly correlated to market share. First of all, when the Xbox was released, the Playstation 2 already had a predecessor with market share. “In Q4 1999, when the PS2 was launched, Sony sold 1.1 million PS1 consoles, and 1.4 million PS2 consoles.” ("Evolution of the Xbox
Supply Chain.") This brand presence was further established when the Playstation 2 was released 12 months before the Xbox. Customers who wanted to move onto the next generation of gaming bought the PS2, choosing not to wait a full year for the Xbox. “Microsoft did not have the established base of games and gamers that Sony enjoyed, and
Sony continued to dominate the market ("Evolution of the Xbox Supply Chain.").”
One of the failure’s of the original Xbox has become a success for Microsoft with the Xbox360. Xbox did not have to worry about being a newcomer into the market anymore, the problem with their first console. Not only that but now they were doing exactly what Sony did. They chose to release their console over a year earlier than the
PS3 taking advantage of the early adopters. In
Cited: "Evolution of the Xbox Supply Chain." Stanfor Graduate School of Business GS.49 (06). Print. Dimmel, Brandon. "Microsoft Targets the Mainstream with New Xbox 360 Strategy." Infopackets. 22 July 2008. Web. 10 Oct. 2009. . "Microsoft execs slam Sony Blu-Ray strategy." Www.gamesindustry.biz/. 2006. Web. 10 Oct. 2009. . Scheisel, Seth. "Microsoft Reveals New Strategy for Xbox." The New York Times. 1 June 2009. Web. 10 Oct. 2009.